Who is liable if the product is defective or harms the consumer?

This article is part of my Manufacturing for a Kickstarter series.

1. The designer for designing something with a flaw?
2. The technician for allowing the flaw to persist?
3. The quality control staff for not catching the flaw?
4. The factory for manufacturing the product?
5. The importer for not doing due diligence before importing it?
6. The retailer that sold the product to the consumer?

Most people would say the factory should be liable, but what happens when the factory is in another country and outside your country’s jurisdiction?

I suppose you could still point the finger at the foreign factory and hope the authorities deal with them to lighten your burden.

But what if the factory was a fly-by-night factory that folded 3 months after your goods shipped and are no longer there anymore?

Or what if the factory, having heard about the problem, decided to change their legal name to evade liability?

Do you even have legally enforceable written contract with the factory or was it a handshake deal?

Photo by Melinda Gimpel on Unsplash

Liability is lost across country boundaries

Unless the factory is located in a country with similar laws and legal structures similar to your country, you shouldn’t count on being able to put liability on them.

That is to say you can still pursue a legal case against them and people have succeeded before, but you should go into manufacturing with an assumption that it’s difficult and most of the liability will be put on you.

Most developing countries (assuming you are using a factory located in a developing country) have a legal system that favors their local factories over a foreign company. This protectionism is in place because they want to protect their factories that provide the much needed jobs to their citizens.

Fighting a legal battle also means the battle will take place in the foreign country because there is no way to compel a foreign factory to come to your country for a lawsuit. This makes the fight a lot more expensive and what happens if the foreign country has lax liability laws?

Photo by Maarten van den Heuvel on Unsplash

Finding a Good Factory

A lot relevant stuff is covered in finding a good factory which talks about the different factors in choosing a factory.

The idea is that product liability is going to bite you one way or another and one way you can minimize it’s impact is by choosing a factory that is more likely to help you through the ordeal.

A factory with a large investment in themselves usually has a reputation to maintain in their own country. Such a factory is more likely to help you if it means they gain goodwill with their other customers.

A factory which has existed for many years is statistically likely to hang around for even more years.

A factory with a strong technical background is more able to provide technical solutions to your problems than one with only minimal manufacturing abilities.

This all means that when choosing a factory, there are more factors to consider than just the price alone. When a liability claim is on the table, other than the monetary damages, you need your factory to offer solutions or workarounds to rectify the problem for your customers.